DJIA 8459.50 -93.46 (-1.09%) S&P 500 1074.91 -9.31 (-0.86%) Nasdaq 1802.54 -22.99 (-1.26%) Value Line ndx 860.19 -8.48 (-0.98%) 30-Year Bond 106 30/32 -13/32 5.64% Yield
Shares of Nordstrom Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NOBE)") else Response.Write("(Nasdaq: NOBE)") end if %>, the Seattle-based department store chain noted for customer service, were marked up $2 29/32 to $35 3/32 today as investors reacted to better-than-expected second quarter earnings. Yesterday, the stock rose $1 7/16 in anticipation of the results. Nordstrom delivered highly fashionable EPS of $0.47, up 23.7% from last year's $0.38 and well ahead of the analysts' consensus estimate of $0.41. The earnings gains came directly from improved operations, as inventories fell 0.8% at stores open more than a year -- a positive development given that overall inventories had risen by 10.2% in the first quarter on just 9.1% higher sales. The improvement is due primarily to new inventory management systems, which the firm has been implementing over the past few quarters.
Appliance maker Sunbeam Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SOC)") else Response.Write("(NYSE: SOC)") end if %> shined $1 11/16 higher to $8 9/16 on word that it will issue warrants to buy 23 million Sunbeam shares carrying a $7 strike price to MacAndrews & Forbes Holdings, the former owner of Sunbeam's recently acquired Coleman unit. Observers believe the transaction will protect Sunbeam from lawsuits by MacAndrews, which is controlled by finance bigwig Ronald O. Perelman. Sunbeam also said former MacAndrews executive and newly installed Sunbeam CEO Jerry Levin has signed a three-year employment agreement with the company. Analysts interpreted the news as an indication that at least Perelman and his buddies think the storm clouds currently swirling about the company will dissipate at some point. Merrill Lynch appeared to join the ranks of the Sunbeam believers as well today by reiterating its "near-term neutral" rating on the stock.
Of the nine initial public offerings originally planned to debut today, only one was brave enough to take a deep breath and bungee jump into the abyss otherwise known as the stock market. The "A" for effort went to Convergys Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CVG)") else Response.Write("(NYSE: CVG)") end if %>, which was rewarded for its bravery with a $1 5/8 gain to $16 5/8. The company sold 13 million shares at $15 per share, after the IPO's lead manager wimped out and cut the offering's size by 5 million shares. The IPO price was also lowered from the initial $17 to $19 per share range. The company was formerly two Cincinnati Bell <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CSN)") else Response.Write("(NYSE: CSN)") end if %> operating units -- Cincinnati Bell Information Systems and MATRIXX Marketing. CBIS provides billing services to wireless telecommunications carriers, such as Sprint's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FON)") else Response.Write("(NYSE: FON)") end if %> Spectrum and AT&T's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> Wireless unit. MATRIXX derives 70% of its revenues from providing customer service and technical support to big-name clients like American Express <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AXP)") else Response.Write("(NYSE: AXP)") end if %> and Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %>.
QUICK TAKES: Little Rock, Arkansas-based department store operator Dillard's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DDS)") else Response.Write("(NYSE: DDS)") end if %> tacked on $11/16 to $35 1/2 after reporting fiscal Q2 EPS of $0.45, beating the First Call mean estimate by $0.03... Retailer Kohl's Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KSS)") else Response.Write("(NYSE: KSS)") end if %> moved up $4 5/8 to $57 1/8 on news that it will be added to the Standard & Poor's 500 Index. The company will replace fellow retailer Mercantile Stores, which is being acquired by Dillard's... Bedding products maker Westpoint Stevens <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WPSN)") else Response.Write("(Nasdaq: WPSN)") end if %>, which will replace Kohl's on the S&P MidCap 400 index, rose $1 5/8 to $35 1/4... Office supplies retailer OfficeMax <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OMX)") else Response.Write("(NYSE: OMX)") end if %> climbed $1 3/16 to $15 1/8 after increasing the size of its share repurchase plan to $200 million from the previously announced $100 million.
Charlotte, N.C.-based brokerage firm Interstate/Johnson Lane <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IJL)") else Response.Write("(NYSE: IJL)") end if %> was lifted $2 11/16 to $38 3/4 on rumors that the company is a merger target... Engineering and construction services firm Foster Wheeler Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FWC)") else Response.Write("(NYSE: FWC)") end if %> advanced $1/2 to $14 1/4 after winning a contract to supply a coal-fired boiler for a new 150 megawatt power plant in Hungary. Bear Stearns also started coverage of the firm with a "buy" rating... Real estate investment trust MGI Properties <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MGI)") else Response.Write("(NYSE: MGI)") end if %> rose $2 3/4 to $27 11/16 after its board approved a plan to liquidate all of the trust's assets, ultimately yielding net cash distributions between $30 and $33 per share to the trust's shareholders... Home equity mortgage lender and servicer Aames Financial Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AAM)") else Response.Write("(NYSE: AAM)") end if %> gained $1 5/16 to $12 3/8 after reporting fiscal Q4 EPS of $0.29, beating the IBES mean estimate by a penny.
Keebler and Mrs. Smith's brand cookie maker Flower Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLO)") else Response.Write("(NYSE: FLO)") end if %> gained $11/16 to $20 1/8 after Goldman Sachs placed the company on its "recommended list." Yesterday, Flower reported fiscal Q2 EPS of $0.19 (before charges), beating analysts' estimates by a penny... Vehicle emissions testing programs operator Envirotest Systems Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: ENR)") else Response.Write("(AMEX: ENR)") end if %> tacked on $1 3/4 to $16 3/4 after agreeing to a $17.25 per share cash buyout bid from investment firm Stone Rivet. Stone Rivet will also assume $275 million in Envirotest debt... Medical device maker Boston Scientific Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSX)") else Response.Write("(NYSE: BSX)") end if %> added another $2 1/2 to $76 7/8 after receiving FDA approval for two coronary stent systems yesterday.
Oil and gas production company Atlantic Richfield Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ARC)") else Response.Write("(NYSE: ARC)") end if %> gained $1 11/16 to $67 9/16 after McDonald & Co. raised its rating to "buy" from "hold." Rival Mobil <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOB)") else Response.Write("(NYSE: MOB)") end if %> picked up $2 3/4 to $69 1/2 and Phillips Petroleum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: P)") else Response.Write("(NYSE: P)") end if %> climbed $2 1/2 to $46 1/8 on merger speculation following this week's combination of Amoco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AN)") else Response.Write("(NYSE: AN)") end if %> and British Petroleum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BP)") else Response.Write("(NYSE: BP)") end if %>... TV network operator USA Networks <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USAI)") else Response.Write("(Nasdaq: USAI)") end if %> picked up $1 1/16 to $28 1/2 after merging its Ticketmaster concert ticketing unit with online city guide producer CitySearch for an undisclosed sum. As a result of the deal, CitySearch will postpone its upcoming initial public offering until the merger is completed... Industrial products direct marketer MSC Industrial Direct Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MSM)") else Response.Write("(NYSE: MSM)") end if %> climbed $1 3/4 to $28 13/16 courtesy of a Prudential Securities upgrade to "strong buy" from "accumulate."
Chip performance accelerator technology developer NeoMagic Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NMGC)") else Response.Write("(Nasdaq: NMGC)") end if %> rose $3/4 to $17 after unveiling fiscal Q2 EPS of $0.27 versus $0.15 last year, beating the Street's estimate of $0.25... Analog and mixed-signal chip maker Unitrode <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UTR)") else Response.Write("(NYSE: UTR)") end if %> moved up $1 5/16 to $16 11/16 after reporting fiscal Q2 EPS of $0.14 (excluding charges), beating the IBES mean estimate of $0.12... Network security products developer Network Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NETA)") else Response.Write("(Nasdaq: NETA)") end if %> rose $3 1/8 to $49 1/4 after completing its acquisition of Dr. Solomon's Group PLC... Digital subscriber line (DSL) network access systems maker Orckit Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCTF)") else Response.Write("(Nasdaq: ORCTF)") end if %> rose $1 3/8 to $15 5/8 after Lehman Brothers began coverage of the stock with a "buy" rating."
Call center management software firm Davox Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DAVX)") else Response.Write("(Nasdaq: DAVX)") end if %> rose another $1 1/16 to $13 1/2 after obtaining a patent yesterday for its call center agent grouping software... Verilink <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VRLK)") else Response.Write("(Nasdaq: VRLK)") end if %> added $9/16 to $7 1/8 after Lehman Brothers started coverage of the telecommunications network access products maker with a "buy" rating... Prepaid calling card company SmarTalk TeleServices <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SMTK)") else Response.Write("(Nasdaq: SMTK)") end if %> added $1 5/8 to $8 1/4 after CS First Boston threw its weight behind the stock with an upgrade to "strong buy" from "buy." The company's shares have fallen 60% since announcing on Tuesday that it will delay its Q2 financial results to take a closer look at its accounting policies.
Life sciences, materials and energy giant DuPont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %> sank $5 3/8 to $55 1/8 in heavy trading after warning that third quarter earnings "will most likely be closer to the low end of the range of analyst estimates." The mean Q3 estimate for the company was $0.75 a share, with projections ranging from $0.66 to $0.82 compared with the $0.86 it earned in the year-ago period. This will mean a second consecutive quarter of lower earnings for the company -- Q2 earnings fell 12% year-over-year. DuPont has had a difficult time because of the impact of lower oil prices, higher interest expense from acquisitions, lower agricultural products revenue, and an "extremely difficult Asian environment." The company expects to see some improvement by the fourth quarter. President and CEO Charles Holliday said, "Performance improvements in 1999 and 2000 will be driven primarily by reshaping DuPont's foundation businesses, such as nylon and polyester, and aggressive productivity improvements that reduce cost and minimize capital expenditures."
United Airlines parent UAL Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UAL)") else Response.Write("(NYSE: UAL)") end if %> fell $3 7/8 to $65 5/8 after saying that third quarter operating revenue will be about the same as the year before due to a slowdown in international sales. The Chicago-based carrier expects revenue per available seat mile to increase 0.5% in Q3 and less than 1% for the year. Industrywide increases in capacity for international flights and the economic downturn in Asia are expected to hurt international sales. Other airlines also dropped on concern that the days of rapid sales growth in the industry are over. American Airline parent AMR Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMR)") else Response.Write("(NYSE: AMR)") end if %> lost $2 1/2 to $60 5/16, US Airways Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: U)") else Response.Write("(NYSE: U)") end if %> shed $2 7/16 to $68 3/16, Delta Air Lines <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DAL)") else Response.Write("(NYSE: DAL)") end if %> slid $2 3/4 to $114 1/2; and Northwest Airlines <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NWAC)") else Response.Write("(Nasdaq: NWAC)") end if %> was cut $1 27/32 to $30 1/8.
QUICK CUTS: Citicorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> dropped $7 to $140 on concern that regulators may impose restrictions on cross-marketing programs between the bank and its merger partner Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %>, which lost $2 7/16 to $56 3/4... Gap Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %> fell $3 1/16 to $63 1/2 after the casual apparel retailer this morning reported Q2 EPS of $0.34, up from $0.17 in the same prior-year period and $0.03 ahead of analysts' mean estimate. Gap shares had moved up $4 1/16 to $66 9/16 yesterday in advance of the earnings report... Aerospace and aircraft giant Boeing <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %> dipped $1 11/16 to $37 3/16 after announcing it will start making some of its 737 jetliners in Long Beach, California, by year end, finish cutting up to 28,000 jobs by the end of next year, and cut more jobs in 2000... GeoCities <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GCTY)") else Response.Write("(Nasdaq: GCTY)") end if %> tanked $7 to $38 1/2 as the personal website company settled federal charges that it used its sites to collect personal data from people, especially children under 13.
Information technology software company Platinum Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PLAT)") else Response.Write("(Nasdaq: PLAT)") end if %> sank $3 1/2 to $27 3/8 after announcing it will acquire information security software developer MEMCO Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MEMCF)") else Response.Write("(Nasdaq: MEMCF)") end if %> for more than $500 million in stock. MEMCO shareholders will receive 0.836 shares of Platinum for each MEMCO share... Steel construction services company Schuff Steel Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SHUF)") else Response.Write("(Nasdaq: SHUF)") end if %> tanked $3 1/8 to $8 7/8 after reporting a Q2 loss of $0.04 a share compared with income of $0.29 a share for the year-ago period. The single analyst projection in First Call was EPS of $0.28... Phone networks capacity booster Advanced Fibre Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AFCI)") else Response.Write("(Nasdaq: AFCI)") end if %> was down another $1 3/16 to $11 7/8 on worries that the company won't be able to sign up customers fast enough to bolster sales this quarter.
Regional theme park company Premier Parks <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PKS)") else Response.Write("(NYSE: PKS)") end if %> shed $7 1/2 to $19 5/16 after announcing that it expects a "modest shortfall" in earnings before interest, taxes, depreciation, and amortization (EBITDA) relative to expectations for the year, all of which will be experienced in Q3. The company reported a breakeven Q2 compared with a loss of $0.12 per share last year and the analysts' mean estimate of income of $0.06... Energy company Barrett Resources <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BRR)") else Response.Write("(NYSE: BRR)") end if %> fell $3 11/16 to $22 5/8 after reporting an explosion at a natural gas well in Wyoming... Discount airline Virgin Express Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VIRGY)") else Response.Write("(Nasdaq: VIRGY)") end if %> fell $3 7/16 to $6 15/16 after warning it will miss analysts' estimates for profit this year due to the high cost of replacing pilots.
Analytical instruments maker Thermo Electron Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TMO)") else Response.Write("(NYSE: TMO)") end if %> lost $1 1/8 to $21 1/2 after announcing plans to cut the number of its publicly traded units to 15 to make it easier for investors to trade shares... Casual apparel direct seller Lands' End <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LE)") else Response.Write("(NYSE: LE)") end if %> was ripped for a $5 1/4 loss to $24 13/16 after reporting breakeven Q2 EPS compared with a profit of $0.11 a share a year ago and well short of analysts' expectations of $0.15... Multiservice wide area networks company Network Equipment Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NWK)") else Response.Write("(NYSE: NWK)") end if %> was cut $2 1/4 to $14 3/8 after declining to comment on the recent activity in its stock... Cable TV operator Cablevision Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: CVC)") else Response.Write("(AMEX: CVC)") end if %> pulled back $1 3/16 to $86 9/16 after saying it will acquire movie theater company Clearview Cinema Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: CLV)") else Response.Write("(AMEX: CLV)") end if %> for $160 million in cash, stock, and assumed debt.
Semiconductor equipment maker Advanced Energy Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AEIS)") else Response.Write("(Nasdaq: AEIS)") end if %> was hit for a loss of $1 3/8 to $8 5/8 after announcing that it will eliminate 128 jobs (14% of its workforce), close down two facilities, and take a one-time restructuring charge of around $1.8 million in Q3... Germany's largest utility Veba AG <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VEB)") else Response.Write("(NYSE: VEB)") end if %> lost $2 1/4 to $54 after reporting a 3.6% drop in first-half earnings due to losses in its silicon-wafer business as well as startup costs in a telecommunications venture. The company also said that earnings for the year will be "significantly" below last year... Little Falls Bancorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LFBI)") else Response.Write("(Nasdaq: LFBI)") end if %> was cut $3 3/4 to $16 after agreeing to merge with Skylands Community Bank <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SKCB)") else Response.Write("(Nasdaq: SKCB)") end if %>, which also fell $1 3/4 to $13, in a stock swap.
FOOL
ON THE HILL
An Investment Opinion
by
Alex Schay
Athletic Shoe Sector Still Stumbling
What's going on with athletic footwear companies? For almost a year now, the segment has labored along like an overweight jogger, unable to hit its stride. The industry's discomfit has been attributed to, of all things, crazy blue Asians... er, that is, the "brown shoe craze" and the "Asian financial crisis." Now, this columnist has always been rather dubious of opinions that manage to wend their way from the financial pages into the more popular press, only to become pat, calcified attributions. And this is especially true in a segment like the athletic shoe business, whose retailers managed to push-out their showroom square footage at a 20% compound rate over the last four years. Such furious capacity additions tend to obscure an observer's ability to make clean attributions about a slowdown. However, it would seem that in this particular instance, the crazy blue Asians really have kept the segment down.
Fallout from continued price competition tripped up athletic and active-wear shoe retailer The Finish Line <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FINL)") else Response.Write("(Nasdaq: FINL)") end if %> like Mary Decker Slaney today. The shares fell $3 11/16 to $10 1/16 after the company's chairman and CEO Alan Cohen announced that the firm is "viewing sales and earnings for the second half of the year more cautiously." The Finish Line stated that it expects second quarter earnings of $0.29 to $0.34 a share compared with $0.34 for the same year-earlier period and the First Call mean estimate of $0.40. In addition, full-year EPS could be between $1.00 and $1.10 versus $1.02 last year and analysts' expectations of $1.21. Back-to-school sales thus far in the year "have significantly fallen off planned sales" due to discounting and softness in athletic apparel sales.
The reason why the company is looking like an "also ran" was summed up by Cohen on the company's conference call, "I walk into their stores and see product that we can sell for $75 being sold for $51." The price slashing perps in this case are Foot Locker and Champs stores owned by Venator Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: Z)") else Response.Write("(NYSE: Z)") end if %> -- this activity was actually revealed a week ago.
Apparently Venator has been (gasp) marking down products from Adidas, Nike, and Timberland. Marking down products made by Nike! It was not too long ago that a retailer canceling an advance order from Nike was a big deal. Nike, which still enjoys 45% market share in the U.S. athletic footwear market, used to command 60-70% of shelf space at retail locations (and in most places it still does). However, until about a year ago when athletic shoe sales began to slip, Nike actually dictated both ordering patterns and in-store presentation for many retail locations -- so it goes when the going is good. When volume began to soften, a shift occurred. Retailers suddenly began to "Just Say No" to Nike, no longer committing to shipments before the fashion environment could be assessed -- but now this, a new low: price cuts.
Finish Line CEO Cohen deemed the cachet-tarnishing move by Venator a "travesty and a tragedy," branding the sportsman a rogue that besmirched the Greek goddess of victory et al. by dragging them down into the underperforming mud at a time when they needed to be uplifted. Well, regardless of whether or not athletic footwear has really hit a new low, let's take a look again at the two major causes of this situation. Perhaps the best barometer for the Asian situation now is Nike's forecast, which is still pretty grim.
Coming out of its fourth quarter conference call, Nike forecast red in Asia for fiscal year 1999. Asia Pacific future orders were down 54% (or 44% on a constant dollar basis) as the economic situation worsened during the quarter and sales continued to drop. Although inventory levels were in better shape -- only down 50% -- the full year outlook for 1999 was still bad. Management stated that revenues in Asia could decline 30-35% with continued deterioration of operating margins. Unlike apparel, where 40% to 50% of the costs are labor-related, for shoe makers labor accounts for only about 10% of costs, and any gains in this area are more than offset by demand weakness.
As for the other part of the ugly equation -- changes in customer preference -- that is a testier issue. Many have argued that athletic shoes no longer hold sway in their prime demographic group -- young males. A wave of gentility has washed over these young men as they don "brown shoes." Why brown, and not black or forest green? No one has ever stated that brown is synonymous with casual. Anyway, at what point does this situation begin to turn? Again, this columnist is still committed to the notion that it's the inventories, stupid.
As a result of the lower growth profiles and the supposed changes in customer preferences over the last year, there has been much hand-wringing about the proper spending levels for the athletic shoe firms now, with many "burdened" by big shoe endorsements and the like. Hey, let's face it. Nike never had any SG&A leverage -- the company spent enormously in order to fortify its business, and that's largely why it blew past industry competitors who tried to game the market on spending. Today, with Nike's infrastructure cost in place in Asia and expenses like endorsement contracts budgeted to increase nearly 50%, Nike has guided full-year SG&A to 27.5%-28.0% of sales -- which is roughly the same as 1998.
The bottom line is that recognizable consumer brands that provide products that many people "need" at some point in their lives rarely trade at 0.25 times sales -- as Reebok <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RBK)") else Response.Write("(NYSE: RBK)") end if %> is now. Sure, the segment (and Reebok in particular) in some senses has been rightly abused, but now may be a good time to get a feel for what's going on in the business. Fashion issues are invariably overblown.
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
WE
DELIVER - Get The Evening News delivered
to your e-mailbox every evening!
ANOTHER FOOLISH THING
See something moving a stock that we didn't cover?
E-mail the
Fool
News Team
and we will start working on the story.
Unfortunately, we cannot answer every e-mail
or respond to individual questions.
|
Contributing Writers Yi-Hsin Chang (TMF Puck), a Fool Brian Graney (TMF Panic), Fool Two Alex Schay (TMF Nexus6), Fool, too Dale Wettlaufer (TMF Ralegh), Final Fool
Editing |